Fuel Costs & Economics Combine To Accelerate Downsizing Trend

by Internet Archive Book Images

Circumstances sometimes force people into simpler lifestyles. This has been specially true since 2009,  when a global recession affected the economic fortunes of millions of people. And one of the first things cash-strapped consumers will notice is a daily-driven car that guzzles fuel like a thirsty worker after a day’s work. Add to that seesawing fuel prices brought about by a variety of factors and it’s easy to see why thirsty vehicles are being sold off in favor of downsized cars.

Consider a current average price of 3.25 U.S. dollars for a gallon of gasoline. If one travels 11,000 miles a year, a car that gets 16 miles to the gallon will cost its owner $ 2,440 dollars while a car that does 26 mpg will eat up only $ 1,500 of the owner’s budget. And those numbers are for large sedans. If you consider the fuel consumption of a Toyota Corolla at 32 mpg, then fuel cost will only be $ 1,200 per annum. That’s a pretty significant number in terms of money that can be put instead into, say, maintenance or other household costs.

If you’re looking to downsize or get a more fuel-efficient car by buying new, then the cost savings will not be immediately apparent in the short-term. Buying a more fuel-efficient car in itself will indeed give you savings in fuel costs, but as every car owner knows, owning a vehicle has a lot more expenses built into it. Considering all costs of ownership (depreciation, fuel, insurance, interest on financing, sales tax, registration, repair and maintenance), it may actually cost more to buy a more fuel-efficient car. Unless your downsizing strategy includes getting into a much smaller car. Say, to a Toyota Corolla from a V8-engined car. Barring that drastic change in car size, the best strategy would seem to be to hold on to your car for the rest of its usable life.

But another strategy to consider would be to buy a used car that has relatively few miles on the clock. A car that’s been used for about two years would, on average, have run only 25,000 miles. But it would have depreciated a lot in terms of value so you can get it relatively cheaply. And you would have the option of getting one with a much more fuel-efficient engine, even a diesel. A two or three year old car will have most of today’s safety advances and by getting rid of or reducing your car loan, the cash you will have on hand can be put to more pressing needs.